GST cut on merchant services to 5%; relief for textile, apparel workers

High level of 18% tax on merchant services would have offered inverted duty structure

The sharp cut in GST (Goods and Services Tax) rates on the work provided by merchant manufacturers to the wholesalers and retailers is set to allow the former claim full input credit from the latter, which would help them compete with captive manufacturers, experts said.

In a major relief for textiles and apparel manufacturers, the GST Council announced a sharp cut in GST rates on the merchant services at 5 per cent from 18 per cent. Since many inputs were kept under various tax slabs, the high level of 18 per cent tax on merchant services would have offered inverted